Question 1

Under the current rate method, inventory at net realizable value would be translated for the balance sheet at what rate?

Accepted Answer

A)  Beginning of the year rate. 
B)  Average rate. 
C)  Current rate. 
D)  Historical rate. 
E)  Composite amount. 
A)  Beginning of the year rate. 
B)  Average rate. 
C)  Current rate. 
D)  Historical rate. 
E)  Composite amount.

Question 2

Kennedy's share of Hastie's net income for 2018 would be

Accepted Answer

A)  $18,000. 
B)  $15,000. 
C)  $18,200. 
D)  $16,000. 
E)  $18,500. 
A)  $18,000. 
B)  $15,000. 
C)  $18,200. 
D)  $16,000. 
E)  $18,500.

Question 3

Under the current rate method, common stock would be translated at what rate?

Accepted Answer

A)  Beginning of the year rate. 
B)  Average rate. 
C)  Current rate. 
D)  Historical rate. 
E)  Composite amount. 
A)  Beginning of the year rate. 
B)  Average rate. 
C)  Current rate. 
D)  Historical rate. 
E)  Composite amount.

Question 4

A highly inflationary economy is defined as

Accepted Answer

A)  Cumulative 5-year inflation in excess of 100%. 
B)  Cumulative 3-year inflation in excess of 100%. 
C)  Cumulative 5-year inflation in excess of 90%. 
D)  Cumulative 3-year inflation in excess of 90%. 
E)  Any country designated as a company operating in a third-world economy. 
A)  Cumulative 5-year inflation in excess of 100%. 
B)  Cumulative 3-year inflation in excess of 100%. 
C)  Cumulative 5-year inflation in excess of 90%. 
D)  Cumulative 3-year inflation in excess of 90%. 
E)  Any country designated as a company operating in a third-world economy.

Question 5

Under the temporal method, inventory at net realizable value would be remeasured for the balance sheet at what rate?

Accepted Answer

A)  Beginning of the year rate. 
B)  Average rate. 
C)  Current rate. 
D)  Historical rate. 
E)  Composite amount. 
A)  Beginning of the year rate. 
B)  Average rate. 
C)  Current rate. 
D)  Historical rate. 
E)  Composite amount.

Question 6

A net asset balance sheet exposure exists and the foreign currency appreciates.Which of the following statements is true?

Accepted Answer

A)  There is no translation adjustment. 
B)  There is a transaction loss. 
C)  There is a transaction gain. 
D)  There is a negative translation adjustment. 
E)  There is a positive translation adjustment. 
A)  There is no translation adjustment. 
B)  There is a transaction loss. 
C)  There is a transaction gain. 
D)  There is a negative translation adjustment. 
E)  There is a positive translation adjustment.

Question 7

Under the current rate method, property, plant & equipment would be translated at what rate?

Accepted Answer

A)  Beginning of the year rate. 
B)  Average rate. 
C)  Current rate. 
D)  Historical rate. 
E)  Composite amount. 
A)  Beginning of the year rate. 
B)  Average rate. 
C)  Current rate. 
D)  Historical rate. 
E)  Composite amount.

Question 8

Assuming the functional currency of the subsidiary is the U.S.dollar, what total should be included in Parker's consolidated balance sheet at December 31, 2018, for the above items?

Accepted Answer

A)  $407,500. 
B)  $418,000. 
C)  $396,000. 
D)  $403,500. 
E)  $398,500. 
A)  $407,500. 
B)  $418,000. 
C)  $396,000. 
D)  $403,500. 
E)  $398,500.

Question 9

The financial statements for Perez are translated by its U.S.parent.What amount of gain or loss would be reported in its translated income statement?

Accepted Answer

A)  $1,530. 
B)  $1,575. 
C)  $1,590. 
D)  $1,090. 
E)  $1,650. 
A)  $1,530. 
B)  $1,575. 
C)  $1,590. 
D)  $1,090. 
E)  $1,650.

Question 10

If a subsidiary is operating in a highly inflationary economy, how are the financial statements to be restated?

Accepted Answer

A)  Historical rate. 
B)  Working capital rate. 
C)  Translation. 
D)  Temporal method. 
E)  Current rate. 
A)  Historical rate. 
B)  Working capital rate. 
C)  Translation. 
D)  Temporal method. 
E)  Current rate.

Question 11

Where is the remeasurement gain or loss reported in the parent company's financial statements?

Accepted Answer

A)  Net income/loss in the income statement. 
B)  Cumulative translation adjustment as a deferred asset. 
C)  Cumulative translation adjustment as a deferred liability. 
D)  Other comprehensive income. 
E)  Retained earnings. 
A)  Net income/loss in the income statement. 
B)  Cumulative translation adjustment as a deferred asset. 
C)  Cumulative translation adjustment as a deferred liability. 
D)  Other comprehensive income. 
E)  Retained earnings.

Question 12

Compute ending inventory for 2018 under the current rate method.

Accepted Answer

A)  $13,950. 
B)  $14,100. 
C)  $14,400. 
D)  $14,850. 
E)  $15,150. 
A)  $13,950. 
B)  $14,100. 
C)  $14,400. 
D)  $14,850. 
E)  $15,150.

Question 13

A net asset balance sheet exposure exists and the foreign currency depreciates.Which of the following statements is true?

Accepted Answer

A)  There is no translation adjustment. 
B)  There is a transaction loss. 
C)  There is a transaction gain. 
D)  There is a negative translation adjustment. 
E)  There is a positive translation adjustment. 
A)  There is no translation adjustment. 
B)  There is a transaction loss. 
C)  There is a transaction gain. 
D)  There is a negative translation adjustment. 
E)  There is a positive translation adjustment.

Question 14

A net liability balance sheet exposure exists and the foreign currency depreciates.Which of the following statements is true?

Accepted Answer

A)  There is no translation adjustment. 
B)  There is a transaction loss. 
C)  There is a transaction gain. 
D)  There is a negative translation adjustment. 
E)  There is a positive translation adjustment. 
A)  There is no translation adjustment. 
B)  There is a transaction loss. 
C)  There is a transaction gain. 
D)  There is a negative translation adjustment. 
E)  There is a positive translation adjustment.

Question 15

If the current rate used to restate these amounts is $.95, what was the average historical rate used to arrive at the total amount for historical rates?

Accepted Answer

A)  $0.9000. 
B)  $1.0000. 
C)  $0.9500. 
D)  $0.9474. 
E)  $1.0556. 
A)  $0.9000. 
B)  $1.0000. 
C)  $0.9500. 
D)  $0.9474. 
E)  $1.0556.

Question 16

When preparing a consolidated statement of cash flows, which of the following statements is false?

Accepted Answer

A)  All operating activity items are translated at an average exchange rate for the period. 
B)  A change in accounts receivable is translated using the current rate. 
C)  A change in long-term debt is translated using the historical rate at the date of the change. 
D)  Dividends paid are translated using the historical rate at the date of the payment. 
E)  All items follow translation rates used for the balance sheet and the income statement. 
A)  All operating activity items are translated at an average exchange rate for the period. 
B)  A change in accounts receivable is translated using the current rate. 
C)  A change in long-term debt is translated using the historical rate at the date of the change. 
D)  Dividends paid are translated using the historical rate at the date of the payment. 
E)  All items follow translation rates used for the balance sheet and the income statement.

Exam 10: A: Translation of Foreign Currency Financial Statements

Under the current rate method, inventory at net realizable value would be translated for the balance sheet at what rate?

Kennedy's share of Hastie's net income for 2018 would be

Under the current rate method, common stock would be translated at what rate?

A highly inflationary economy is defined as

Under the temporal method, inventory at net realizable value would be remeasured for the balance sheet at what rate?

A net asset balance sheet exposure exists and the foreign currency appreciates.Which of the following statements is true?

Under the current rate method, property, plant & equipment would be translated at what rate?

Assuming the functional currency of the subsidiary is the U.S.dollar, what total should be included in Parker's consolidated balance sheet at December 31, 2018, for the above items?

The financial statements for Perez are translated by its U.S.parent.What amount of gain or loss would be reported in its translated income statement?

If a subsidiary is operating in a highly inflationary economy, how are the financial statements to be restated?

Where is the remeasurement gain or loss reported in the parent company's financial statements?

Compute ending inventory for 2018 under the current rate method.

A net asset balance sheet exposure exists and the foreign currency depreciates.Which of the following statements is true?

A net liability balance sheet exposure exists and the foreign currency depreciates.Which of the following statements is true?

If the current rate used to restate these amounts is $.95, what was the average historical rate used to arrive at the total amount for historical rates?

When preparing a consolidated statement of cash flows, which of the following statements is false?

The Equity Method of Accounting for Investments

A: the Equity Method of Accounting for Investments

Consolidation of Financial Information

A: Consolidation of Financial Information

Consolidations - Subsequent to the Date of Acquisition

A: Consolidations - Subsequent to the Date of Acquisition

Consolidated Financial Statements and Outside Ownership

A: Consolidated Financial Statements and Outside Ownership

Consolidated Financial Statements Intra-Entity Asset Transactions

A: Consolidated Financial Statements Intra-Entity Asset Transactions

Variable Interest Entities, Intra-Entity Debt, Consolidated Cash Flows, and Other Issues

A: Variable Interest Entities, Intra-Entity Debt, Consolidated Cash Flows, and Other Issues

Consolidated Financial Statements - Ownership Patterns and Income Taxes

A: Consolidated Financial Statements - Ownership Patterns and Income Taxes

Segment and Interim Reporting

A: Segment and Interim Reporting

Foreign Currency Transactions and Hedging Foreign Exchange Risk

A: Foreign Currency Transactions and Hedging Foreign Exchange Risk

Translation of Foreign Currency Financial Statements

Worldwide Accounting Diversity and International Accounting Standards

A: Worldwide Accounting Diversity and International Accounting Standards

Financial Reporting and the Securities and Exchange Commission

A: Financial Reporting and the Securities and Exchange Commission

Accounting for Legal Reorganizations and Liquidations

A: Accounting for Legal Reorganizations and Liquidations

Partnerships: Formation and Operation

A: Partnerships: Formation and Operation

Partnerships: Termination and Liquidation

A: Partnerships: Termination and Liquidation

Accounting for State and Local Governments, Part I

A: Accounting for State and Local Governments, Part I

Accounting for State and Local Governments, Part II

A: Accounting for State and Local Governments, Part II

Accounting for Not-For-Profit Entities

A: Accounting for Not-For-Profit Entities

Accounting for Estates and Trusts

A: Accounting for Estates and Trusts

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